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This paper aims to explore the implementation framework, project performance, underlying motives, perceived benefits, potential difficulties, as well as critical success factors, of adopting the target cost contracting (TCC) form of procurement, based on an in‐depth real‐life case study of a challenging underground railway station modification project in Hong Kong.

The case project was analysed by means of the related project documentation and face‐to‐face interviews with the relevant senior representatives from the client organisation.

The target cost‐based procurement strategy generates a plethora of benefits throughout the whole delivery process of the project case, including the provision of cost incentives for the contractor to work efficiently, aligning individual goals of various contracting parties with the overall project objectives, achieving better value for money and more satisfactory overall project performance in terms of time, cost and dispute occurrence.

Although the selected TCC case study project is based in Hong Kong, the research findings and hands‐on experience of the relevant industrial practitioners may be cross‐referenced to other similar TCC projects in other parts of the world for international comparisons.

The paper provides some useful insights into assisting key project stakeholders in maximising the benefits, whilst minimising the detriments brought about by potential difficulties in launching the TCC scheme. It seeks more research evidence to evaluate the entire project delivery process, and capture the levels of success and lessons learned from previous TCC construction projects for generating best practice recommendations to achieve better construction performance.

The heavy civil engineering industry (railways, sewage treatment, chemical and pharmaceutical facilities, oil and gas facilities, etc.) is one of the major contributors to the British economy and generally involves a high level of investment. Clients in this industry are demanding accurate cost estimate, proper analysis of out‐turn cost and cost escalation and a high quality risk analysis throughout the construction processes. Current practice in the industry has suggested that there is a lack of structured methodologies and systematic cost escalation approach to achieve an appropriate cost analysis at the outset of projects and throughout the construction processes. In this context the prime objective of this research work is to develop a structured cost escalation methodology for improving estimating management and control in the heavy engineering industry construction processes. The methodology is composed of a forecasting model to predict cost indices of major items in industry and a risk knowledge base model for identifying and quantifying causes of cost escalations. This paper, as part of the research, reviews and discusses a knowledge‐based model for applying a cost escalation factor. The cost escalation factor is made up of market variation, a risk element and a component for bias. A knowledge elicitation strategy was employed to obtain the required knowledge for the model. The strategy included questionnaires, interviews and workshops and deliverables came in the form of influences and their effect on project cost escalation. From these deliverables, the concepts of a decision support model and system specification for applying cost escalation to base estimates is proposed.

A literature review suggested that conservation refurbishment work was perceived by design professionals to be inherently more risky than new‐build projects. The objective assessment of risk items helps ameliorate its impact. The results of a large questionnaire‐based survey evaluating specialist design consultants’ risk identification and management approaches are presented. The risk management approaches of specialist design consultants are divergent, reflecting their professional philosophies, educational programmes and experience. Further differences emerge according to practice size and contract value. Particular attention is paid to the responses considering contingency pricing, project budget forecasts and extensions of time. Results suggest that client education via briefing and consultants’ wider use of confidence limits can help improve the management of risk.

Significant risk factors inherent in construction cost flow forecast were identified in this study. The aim of this paper is to develop regression models to assess the impacts of the identified risks on the baseline forecast at the in‐progress stage of construction.

Two stages were involved in data collection. The first was a structured questionnaire survey administered on 370 UK contractors to identify significant risk factors inherent in cost flow forecast. The second stage was the collection of forecast and actual cost flow data from 55 case study projects. Variations between these pair of data sets were measured at 30 per cent, 50 per cent, 70 per cent and 100 per cent completion periods. Respondents were then requested to score on a Likert type scale, the extent of occurrence of the significant risk factors in the case study projects. This pair of data sets were used in regression modelling.

Significant risk factors were identified from the questionnaire survey analysis as: changes to initial design, variation to works, production target slippage, delay in agreeing variation/dayworks and delay in settling claims among others. Using the identified significant risk factors and the periodic variability measurements, multiple linear regression models were developed. The models were promising in that they helped to establish the fact that the phenomenon under consideration could be modelled. They also provided some insights in explaining the observed variability between the baseline cost flow forecast and actual cost flow based on risk impacts.

The developed models showed a promising level of accuracy but also indicated that the phenomenon under consideration is not strictly linear and may need to explore some other form of modelling.

The developed models provide invaluable information to the construction contractors regarding the likely impacts of significant risk variables on cost flow baseline forecast at different stages of construction so that a pro active risk response can be put in place.

This study makes an original contribution of providing a modelling insight into the phenomenon of how risks inherent in construction could impact the baseline cost flow forecast at different stages of construction. The information is invaluable in making pro active risk response.

Identifies the magnitude and importance of the level of software development costs in a modern high‐technology manufacturing environment. Analyses the variety of cost control practices as evidenced in the English‐language journals. Develops a holistic feed‐forward control model using the Japanese management accounting technique of target costing. Examines the relevance of each technique in relation to its most cost‐effective role and predicts that target costing will be widely adopted in the near future.

The paper aims to present a succinct review of guaranteed maximum price (GMP) and target cost contracting (TCC) concepts and features in general, and to identify the critical success factors for procuring GMP/TCC contracts from the Hong Kong perspective in particular.

By means of an empirical questionnaire survey geared towards industrial practitioners with direct hands‐on GMP/TCC experience, the opinions of various contracting parties including clients, consultants and contractors were solicited, analysed and compared in relation to GMP/TCC success factors.

Experienced practitioners shared the unanimous perception that: reasonable share of cost saving and fair risk allocation; partnering spirit from all contracting parties; right selection of project team; well‐defined scope of work in client's project brief and early involvement of contractor in design development, are the most essential ingredients for the successful implementation of GMP/TCC scheme.

Although the research study is based in Hong Kong with a limited sample size, the survey findings and hands‐on experience of the relevant industrial practitioners may be cross‐referenced to other similar investigations in other parts of the world for international comparisons.

The research study has provided some useful insights into assisting key project stakeholders in determining important successful ingredients when launching GMP/TCC scheme. Such an identification of critical success factors would be valuable in formulating effective practical strategies to improve overall project performance, create win‐win opportunities for contracting parties and mitigate the occurrence of construction disputes/claims. It also attempts to seek more research evidence to capture the levels of success and lessons learned from previous GMP/TCC construction projects for generating best practice recommendations for future implementation.

This paper aims to investigate the operational mechanism, project performance, motives behind, benefits, difficulties and success factors of adopting the guaranteed maximum price (GMP) scheme based on a real‐life case study of Chater House, an international Grade A private office project in Hong Kong.

The case project was analysed by means of the related project documentation and a series of face‐to‐face interviews with the relevant senior project representatives.

All the interviewed key project stakeholders perceived that the GMP contract helped achieve competitive price, value for money and superior quality of products as well as provided stronger incentives to innovation and cost saving. The case study revealed that the overall success of this GMP project was underpinned by several key attributes.

The paper provides solid groundwork for client bodies and contracting organisations to develop a best practice framework for implementing successful GMP schemes in future construction.

Amin Mawji leads Ernst & Young’s aerospace and defence industry group in London. Here he argues that in the aftermath of a period of corporate uncertainty the need for applying practical tests for real risks on long‐term projects is even more important.

Early involvement of the construction team is increasingly utilized in demanding projects to incorporate versatile expertise in their planning. For public owners this is a challenge since they are obliged to use competitive, transparent team selection based on the ‘most economically advantageous’ criterion which ensures that both price and quality viewpoints are taken into account. In the case of early involvement, the price component naturally does not include the total price, but may consist only of the fee-percentages of competing service providers. This study examines such a selection situation in project alliancing in the European context and seeks to find a way to integrate the fee component in a multi-criteria selection system and determine reasonable fees for different levels of capabilities. The study builds on the performance difference between different capabilities, derived from a survey of practitioners, and determines an indifference curve arithmetically for the planning of a selection method. The influence of the owner‘s risk attitude and risk premiums are also considered exploratively based on the pricing methods of the theory of finance.

This paper aims to present and describe a value for money framework that can be used on alliance projects to improve the consideration of, and reporting of, value for money.

Development of the framework used a combination of interviews with domain experts, reflection on practice and a Delphi panel to develop and refine a value for money/best value outcome framework for alliance projects.

The results indicate that a robust framework for demonstrating value for money in an alliance project is feasible, and a framework was developed and tested through the Delphi panel.

The paper briefly describes the research approach but focuses on the outcome rather than the process.

The research aim of this paper is to expand the conceptual view and to illustrate how a practical assessment of value for money in project alliancing can be achieved. It presents the framework and describes it in sufficient detail for readers to be able to adopt and adapt it.

Value for money in infrastructure projects has profound implications for society; this extends and enhances techniques used to assure value for money.

The paper provides a value for money framework across the whole project design to delivery cycle.